WG Wearne Limited HY 2014 results

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WG Wearne Limited HY 2014 results

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WG Wearne Limited HY 2014 results

  1. 1. Unaudited financial results for the period ended 31 August 2013 HIGHLIGHTS • Revenue up 14.66% • Operating profit up 19.37% CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited 6 months August 2013 R’000 ASSETS Non-current assets Property, plant and equipment Other financial assets Deferred taxation asset Current assets Inventories Loans receivable Other financial assets Trade and other receivables Cash and cash equivalents Non-current asset held for sale Total assets EQUITY AND LIABILITIES Equity Issued capital Reserves Revaluation reserve Accumulated losses Non-current liabilities Borrowings Deferred taxation liability Environmental provision Current liabilities Loans payable Borrowings Current taxation payable Trade and other payables Bank overdraft Total liabilities Total equity and liabilities Number of shares in issue (‘000) Net asset value per share (cents) Net tangible asset value per share (cents) Unaudited Audited 6 months 12 months August 2012 February 2013 R’000 R’000 336,884 321,321 5,003 10,560 99,943 25,539 539 71,007 2,858 4,500 441,327 362,479 357,815 4,664 87,626 20,514 3,314 59,558 4,240 4,500 454,605 355,161 339,726 4,875 10,560 73,401 19,848 987 45,519 7,047 4,500 433,062 34,090 178,316 809 37,294 (182,329) 244,897 220,069 13,722 11,106 162,340 42,755 898 80,993 37,694 407,237 441,327 48,659 177,857 345 43,299 (172,842) 247,185 223,524 8,795 14,866 158,761 5,046 39,552 1,676 64,063 48,424 405,946 454,605 35,489 178,357 759 39,296 (182,923) 244,007 218,272 13,860 11,875 153,566 52,467 647 65,567 34,885 397,573 433,062 273,038 12.49 12.49 273,038 17.82 17.82 273,038 13.00 13.00 Reconciliation of headline loss: Loss for the year Loss on sale of property, plant and equipment Profit on sale of interest in joint venture Headline loss attributable to ordinary shareholders Reconciliation of EBITDA: Earnings/(loss) before interest and taxation (“EBIT”) Depreciation – Cost of sales Depreciation – Operating expenses Earnings/(loss) before interest, taxation, depreciation and amortisation (“EBITDA”) Weighted average number of shares in issue(‘000) Fully diluted weighted average number of shares (‘000) Continuing operations Basic and diluted loss per share (cents) Continuing and discontinued operations basic and diluted loss per share (cents) Basic and diluted headline loss per share (cents) Unaudited 6 months August 2013 R’000 243,917 (188,631) 55,286 2,241 (45,747) 11,780 Reclassified Unaudited Audited 6 months 12 months August 2012 February 2013 R’000 R’000 212,720 400,001 (160,354) (315,478) 52,366 84,523 561 2,065 (43,060) (79,428) 9,867 7,160 985 (14,322) (1,557) 149 (1,408) 97 (13,729) (3,765) 138 (3,627) (1,408) (3,627) 475 (27,318) (19,683) 4,365 (15,318) (2,393) (17,711) 60 (10) 50 - 414 (77) 337 (1,358) (3,627) (17,374) (1,408) 1,239 (3,627) 139 (17,711) 258 (169) (3,488) 667 (16,786) 11,780 9,867 7,160 17,634 459 29,873 17,617 425 27,909 24,680 9,334 41,174 273,038 273,038 273,038 273,038 273,038 273,038 (0.52) (1.33) (5.61) (0.52) (1.33) (6.49) (0.06) (1.28) (6.15) CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Balance at beginning of period Total comprehensive loss for the period Other comprehensive income Movement treasury shares Balance at end of period Unaudited 6 months August 2013 R’000 35,489 (1,408) 49 (40) 34,090 Unaudited Audited 6 months 12 months August 2012 February 2013 R’000 R’000 52,786 52,786 (3,627) (500) 48,659 (17,711) 414 35,489 CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net cash flows from continuing operations Net cash flows from discontinued operations Net change in cash and cash equivalents Cash and cash equivalents beginning of period Cash and cash equivalents at end of period Unaudited 6 months August 2013 R’000 1,453 (428) (8,022) (6,997) - • EBITDA up 7.29% • Increased revenue across all business segments SEGMENTAL REPORTING CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Continuing Operations Revenue Cost of sales Gross profit Other income Operating expenses Earnings before interest and taxation (“EBIT”) Investment income Finance costs Loss before taxation Taxation Loss from continuing operations Loss from discontinued operations Loss for the period Other comprehensive income: Items that will be reclassified subsequently to profit or loss Fair value adjustments Deferred tax on revaluation Total other comprehensive income for the year Total comprehensive loss attributable to: Owners of the parent WG Wearne Limited (Incorporated in the Republic of South Africa) (Registration number 1994/005983/06) JSE Code: WEA ISIN: ZAE000078002 (“Wearne” or “the company” or “the Group”) Unaudited Audited 6 months 12 months August 2012 February 2013 R’000 R’000 (15,481) 6,661 (4,083) (11,713) (483) 2,154 (20,047) (2,898) (803) (6,997) (27,838) (20,047) (24,137) (3,701) (24,137) (34,835) (44,184) (27,838) REVIEW OF RESULTS Unaudited 6 months August 2013 R’000 Revenue: External sales Aggregates Readymix concrete Concrete manufactured products Total revenue: External sales Revenue: Inter-segment sales Aggregates Readymix concrete Concrete manufactured products Total revenue: Inter-segment sales Revenue: Total sales Aggregates Readymix concrete Concrete manufactured products Total revenue: Total sales Property, plant and equipment Aggregates Readymix concrete Concrete manufactured products Total property, plant and equipment Total assets Aggregates Readymix concrete Concrete manufactured products Total assets Unaudited Audited 6 months 12 months August 2012 February 2013 R’000 R’000 123,634 113,290 6,993 243,917 111,054 95,092 6,574 212,720 197,592 191,747 10,662 400,001 34,195 34,195 27,134 27,134 58,832 317 59,149 157,829 113,290 6,993 278,112 138,188 95,092 6,574 239,854 256,424 192,064 10,662 459,150 261,977 37,145 22,199 321,321 292,116 43,414 22,285 357,815 276,996 40,882 21,848 339,726 336,408 80,863 24,056 441,327 354,751 75,386 24,468 454,605 338,080 70,779 24,203 433,062 NOTES The following classes of property, plant and equipment are carried according to the revaluation model; • Land and buildings • Specific plant and machinery The revaluation was conducted by an independent appraiser, Fredrick Senekal (a Sworn Appraiser to the Master of the Supreme Court, duly appointed by the Minister of justice in terms of section 6(1) of the Administration of Estates Act, 1965 (Act 66 of 1965), effective 29th February 2012. The fair values were determined by the appraiser based on the current market values for similarly traded items of property, plant and equipment. Had the assets continued to been carried according to the cost model the carrying values would be as follows: Cost R `000 Revaluation Model R `000 Surplus R `000 113,793 118,400 232,193 152,230 126,774 279,004 38,437 8,374 46,811 BASIS OF PREPARATION These interim results have been prepared in accordance with and contain the information required in terms of International Financial Reporting Standards (“IFRS”), the Companies Act of South Africa(Act 71 of 2008), as amended, and International Accounting Standards (IAS 34 : Interim Financial Reporting), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards and in compliance with the Listings Requirements of the JSE Limited. Except for the new standards adopted as set out below, all accounting policies applied by the Group in the preparation of these condensed consolidated interim financial statements are consistent with those applied by the Group in its consolidated financial statements as at and for the year ended 28 February 2013. The Group has adopted the following new standards:   • Amendment to IFRS 7 – Disclosures – Offsetting Financial Assets and Financial Liabilities • IFRS 10 – Consolidated Financial Statements • IFRS 11 – Joint Arrangements • IFRS 12 – Disclosure of Interests in Other Entities • IFRS 13 – Fair Value Measurement • Amendments to IAS 1 – Presentation of Items of Other Comprehensive Income • Revised IAS 27 and 28 – Investments in Associates and Joint Ventures There was no material impact on the interim financial statements identified based on management’s assessment of these standards. These condensed interim consolidated financial statements incorporate the financial information of the company, its subsidiaries and special purpose entities that, in substance, are controlled by the Group. Results of subsidiaries are included from the effective date of acquisition or up to the effective date of disposal. All significant transactions and balances between group enterprises are eliminated on consolidation. COMPARITIVE FIGURES Certain items of salaries, indirect overheads and depreciation for the 2012 period have been reclassified from cost of sales to operating expenses to be comparative with the Audited results ending 28 February 2013 and Unaudited interim results as at 31 August 2013. Continuing Operations Revenue Cost of sales Gross profit Other income Operating expenses Earnings before interest and taxation (“EBIT”) Investment income Finance costs Loss before taxation Taxation Loss from continuing operations Loss from discontinued operations Loss for the period INTRODUCTION The increased revenues in conjunction with the Group’s focus on efficiencies have resulted in a 19.37% increase in the operating profit. This is a direct result of streamlining overhead structures and the implementation of cost monitoring processes. The Group’s gross profit margin has increased to 22.67% compared to the 21.13% for the year ended 28 February 2013. The Group’s EBITDA also increased by 7.29% to R29.9 million (2012 period: R27.8 million) for the 2013 period. Consequently the Group reduced its total comprehensive loss by 61.18% or R2.22 million to R1.4 million (2012: R3.6 million). This resulted in the basic and diluted headline loss per share decreasing from 1.28 cents to 0.06 cents per share. The 2013 period saw a R7 million net cash outflow compared to the net cash outflow of R20 million in the 2012 period. The primary outflows have arisen from operating activities caused by the Group’s sales growth of 15.95% period on period and consequently its trade and other receivables increased by 19% or R25.5 million from its financial year end. PROSPECTS Property, Plant and Equipment Group 2013 Land Plant and Machinery For the six months ended 31 August 2013 (“2013 period”)the Group generated revenue of R243.9 million (2012: R212.7 million) which represents a growth of 14.66% when compared to the six months ended 31 August 2012 (“2012 period”). The growth in revenue was realised in the Group’s ready mixed concrete division which yielded a 19.13% or R18.2 million increase in revenue period-on-period. The Group’s aggregates division has remained a consistent contributor to the Group’s turnover with a 11.32% or R12.6 million increase in revenue period-onperiod whilst the precast division has shown a 6.37% or R0.4 million increase in revenue. The Group continues to focus on key strategic areas and monitor individual business operating units at a management level. With relatively low gross margin levels at certain business units constant monitoring and early management intervention mitigates the risk of losses. The ready-mixed concrete division showed continuous growth during the financial year and performance is expected to improve further. Market conditions are expected to remain competitive as there is still spare capacity in the cement industry. New entrants in the cement industry could also change the operating environment in this business. A supplier agreement with a cement provider was concluded in the current financial year which resulted in lower cement costs and higher gross profit margins. The outlook for the aggregate business remains positive as the South African Government’s planned infrastructure development starts to materialize. The increased demand for road building material and railway ballast that was seen towards the end of the 2013 financial year is expected to continue. The order book for aggregates indicates that revenue targets set at the beginning of the financial year will be met. The Concrete Manufactured Products division showed a growth of 6.37% periodon-period. The issuing of very few tenders by the Limpopo Roads Agency still negatively affects the market for concrete pipes and culverts in the Limpopo area. Greater plant efficiencies however resulted in improved profitability on slightly lower revenue. The plant capacity was expanded further with an investment of R 700 000 in new product lines. The additional products lines have expanded the product offering and made the business more competitive in the concrete pipe market. The Group continues to emphasize the importance of customer relations and an exceptionally strong focus has been placed on the constructive engagement with our customers in order to provide the highest levels of service. GOING CONCERN Solvency and Liquidity The Group incurred a total comprehensive loss of R1.4 million for the 2013 period and continues to remain in a loss making position. This coupled with the negative liquidity position highlights a possible going concern issue. Under the Bank Overdraft included in Current Liabilities is an Overdraft with Nedbank of R12.87 million as well as an Invoice Discounting facility of R24.82 million. The Bank Overdraft was converted into a two year Term Loan in September 2013 and negotiations are underway to sell further properties in the portfolio to reduce the Term Loan. All debt outstanding in terms of the Creditors’ scheme of arrangement was settled in March 2013. In response to this position the Group has been working closely in conjunction with its financiers in order to meet all its working capital requirements. The Group continues to maintain a solvent position with a net asset value of R34.1 million or 12.49 cents per share. Cash Flow In line with strict cash flow management policies the Group has managed to meet its working capital obligations. Continued Focus Management continues to review all aspects of the business in order to ensure that resources are being utilized effectively. This ensures that all cost areas are closely monitored in order to reduce expenditure and release cash reserves for the Group’s working capital. In light of the above, the going concern basis has been adopted in preparing these interim financial statements. The directors have no reason to believe that the Group or any company within the Group will not be a going concern in the foreseeable future. DIVIDENDS In line with past practice, no dividend has been declared for the period. Previous Unaudited 6 months August 2012 R’000 212,720 (181,161) 31,559 561 (22,253) 9,867 Reclassified Unaudited 6 months August 2012 R’000 212,720 (160,354) 52,366 561 (43,060) 9,867 Net Change R’000 20,807 20,807 (20,807) - 97 (13,729) (3,765) 138 (3,627) (3,627) 97 (13,729) (3,765) 138 (3,627) (3,627) - WG Wearne Limited and its subsidiaries (“the Group”) provide a comprehensive range of products to the building and construction industry in South Africa. The major operating divisions comprise aggregates, ready mixed concrete, the manufacture of precast concrete products, premix as well as contract crushing and screening services. The preparation of the condensed interim consolidated financial results was supervised by JJ Bierman (CA) SA. By order of the board 13 November 2013 S J Wearne Chief Executive Officer J J Bierman Chief Financial Officer CORPORATE INFORMATION Non-executive directors: M M Patel (Chairman); M C Khwinana; M Salanje; WP van der Merwe Executive directors: S J Wearne; J J Bierman Registration number: 1994/005983/06 Registered address: 3 Kiepersol House, Stone Mill Office Park, 300 Acacia Road, Cresta, 2195 Postal address: PO Box 1674, Cresta, 2118 Company secretary: Ithemba Governance and Statutory Solutions (Pty) Ltd Telephone: (011) 459 4500 Facsimile: (011) 478 5481 Transfer secretaries: Computershare Investor Services (Pty) Limited Designated Adviser: Exchange Sponsors These results and an overview of Wearne are available at www.wearne.co.za

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